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October 2015 has been set by the government as the launch date for the scheme to allow people to top up their additional state pension via a new class 3A voluntary National Insurance contribution.
The arrangement – announced in last year’s autumn statement – will run for a limited period to help taxpayers who will reach state pension age before 6 April 2016. Those expected to benefit most are low-earning workers, carers and the self-employed, who have always been excluded from the state second pension and state earnings related pension scheme.
October 2015 has been set by the government as the launch date for the scheme to allow people to top up their additional state pension via a new class 3A voluntary National Insurance contribution.
The arrangement – announced in last year’s autumn statement – will run for a limited period to help taxpayers who will reach state pension age before 6 April 2016. Those expected to benefit most are low-earning workers, carers and the self-employed, who have always been excluded from the state second pension and state earnings related pension scheme.
The price of class 3A will be based on an actuarially fair rate and be calculated using the latest estimates of life expectancy from the Office of National Statistics.
Prices will be lower for older pensioners because they will have a shorter average life in retirement at the point they take up class 3A – which will sit alongside the existing class 3 voluntary contributions.
Taxpayers should first consider making class 3 contributions where possible, said HMRC.
Each class 3A contribution will result in the acquisition of a unit of extra pension that will increase the contributor’s additional state pension by £1 a week up to a cap of potentially £25. Entitlement will begin in the week following the day on which class 3A contributions are paid.
